Skip to main content

tv   Street Signs  CNBC  November 20, 2009 2:00pm-3:00pm EST

2:00 pm
i'm simon hobbes in today for erin burnett. here is a look at your road map. the big story, the dollar stabilizes the stock market rallies. the question out there, where does the market go now? and will shareholders tell goldman sachs to cut its bonuses and give them the money? do we have a valid point on that? and in a country with a 10% unemployment rate and an economy slowly recovering, we found a bright spot. meanwhile the market is down, but we're still pacing for the best november gain since 2002. let's get back to the trading floors. bob pisani at the new york stock exchange and rick santelli in the bond pits. let's go to you first, bob. >> the important thing is it's about the dollar and the dollar has been trending upward throughout the week as mr. bernanke gave a speech earlier in the week. the stock market has been having trouble since then. the nasdaq is down about 1%. one group that is holding up fairly well considering all the pressure that's been on the
2:01 pm
dollar, pressure on the stock market is some of those dry bolt shipping stocks. you know the baltic dry index which measures roughly the cost of shipping goods has been up for the last several weeks now. in fact, new highs here. the important thing is why is it doing that? take a look at some of the stocks like diana shipping. these companies lease container cargos to companies around the world. they have been up recently. bottom line while there are a lot of new cargo containers coming on, the ports are congested. there's a little more competition for some of the vehicles that are out there right now. as far as the home builders go, switching gears a little bit, d.r. horton has the same problem everybody else has. they still have massive impairments for their holdings and they still can't raise the prices enough to get strong margins. even though orders are up prices are still low. i'll close with the oil service stocks and having problems as
2:02 pm
there is some indication that the demand is a bit lower for oil drilling rigs next year. >> i have a feeling that the credit markets are going to have a big amount of coverage going into year end. you can already sense it. before we get to the charts, we've all talked about how there's some negative bill rates out there, how one-month and three-month are inverted because they want the bills that carry them over the end of the year. look at a one-month chart of twos. this masks it a bit. this could be floating down the curve because there might not be enough bills out there. what it doesn't show is the last several sessions we've made forays under 70 basis points. we just haven't closed under 70 basis points. this monday two-year note auction could be something very interesting to watch to see if that safe harbor buying for year end starts to move into the curve in the coupons and the twos and threes and fives.
2:03 pm
one-month chart of the dollar index, this chart shows you clearly we have had many times we've traded in the last month over where we're trading now. two weeks ago we closed much higher than we are now, but the real key isn't why the dollar is moving higher. it's really if we can get a big enough bounce to put more shorts in the box to get more of a rally and many believe that breaking point is 76 even and we're just not there yet. back to you. >> rick, thank you very much for that. so fatigue in the dash for risk. the dollar finding its footing and the equity markets certainly stalling. what can we expect in the weeks ahead. next week when you have that shorter week due to the holiday. joining me is michael woolfolk and brian kelly, who is president of conundrum research. i was interested to read your research note, brian, that you think the dollar at this particular stage is under valued where it stands. >> right. that's probably counterintuitive to a lot of people because all
2:04 pm
the coverage has been how weak the dollar is and how bad the dollar is, but if you look at it on a purchasing power parity basis, the dollar is somewhere around 20% to 25% undervalued p. given the fact there's such a crowded trade here, i think you have an opportunity. such a crowded short trade, you have the opportunity for the dollar to reverse quickly and you have an undervalued asset. i think it's a good place to get into the dollar. >> michael, is he right? >> essentially, the point is whether or not you factor in china because that's really the center of global financial imbalances right now, simon, is that mainland china is responsible for two-thirds of the u.s. trade deficit. that foreign exchange rate is fixed and unless that begins to change, it's going to continue to present problems for the market. >> talk me through that because what you're talking about in contrast to brian is flow, is it not? >> well, it certainly is slow. one of the factors has been that china has had effectively fixed
2:05 pm
exchange rates since 1994, and it has had considerably lower inflation than in the united states. consequently the currency in china should have been appreciating rather than staying stable against the u.s. dollar. the chinese currency is significantly undervalued now by the order of 10% to 20% or so and -- >> michael, forgive me for interrupting, but i think whorve watch this is network is well rehearsed with that. why do you fundamentally differ from brian in your analysis of the dollar? talk me through what i believe is the flow. it's not the value, if you like. it's actually what's happening on a daily basis i think is what you're driving at. >> well, the dollar we think is probably fairly valued against the majors because it's allowed to float freely against the majors. the problem is that we don't have a market price for the dollar/yuan rate. we need to have one.
2:06 pm
until we have one it's going to cause tremendous imbalance problems. >> could brian be right we could get a significant rebound. >> we will get a significant rebound once the fed begins raising interest rates. the 0% interest rate is prompting the dollar which is artificially pushing the value of the dollar down against the euro and other major currencies. >> that could not be for months, possibly a year, possibly more. >> the longer this drags on, the larger the potential correction once the carry trade comes off, and this could create a fair price dislecation as we have seen elsewhere. back in 1992 we saw a 20 big figure move. >> how does that ripple out to other trades? i see you're anxious to nail the idea that the u.s. dollar and the s&p 500 are always inversely correlated. >> yeah, well they're not always
2:07 pm
inversely correlated. it's just a false assumption. the market has been operating thaund assumption for the last let's call it two years. just a fun fact of the day over the last two years 23% of the time the dollar has been up and the s&p 500 has been up. the rest of the time dollar is down, s&p 500 is down. there's been an inverse correlation, but that's not always been the case since 1973. if you look at the correlations, it goes from correlated to noncorrelated to back and forth. >> so what's happening at the moment, brian, when people are trading exactly on that correlation? exactly against what you're suggesting? >> well, that's what i'm saying is it's so ingrained in the marketplace here that the stocks go up if the dollar goes down. it's just not true. and that's the trade that's on. that's the mechanics that are going on in the market right now. you have this crowded short trade. >> so how do i make money, brian? how do i make money? >> i mean, the easiest way for the investor at home is to go long the dollar via uup.
2:08 pm
it is heavily weighted towards the euro but you can buy the etf uup. i am also short the swiss franc, short the british pound and the japanese yen. those are the easiest way to play it. >> michael, how would you make money? >> i would be on the other side of that trade certainly if brian would like to call me on the outside. we think the dollar is most likely to go down 5% to 10% over the course of the next three to six months. we do think though that the carry trade remains quite vigorous. i think the way to play that is go long aussie, go short yen. >> good to talk to you both. have a great weekend. thank you, michael and brian. up next on "street signs," less bonuses, more profits. goldman sachs' biggest shareholders demanding a bigger piece of the pie but who should be rewarded more, the execs who raked in the money or the
2:09 pm
shareholders. we have both sides of that debate next. plus financial utopia. an inside look at how one american city managed to dodge the recession bullet as the state of the state series continues. you're watching "street signs" on cnbc, first in business worldwide.
2:10 pm
2:11 pm
ch investors.
2:12 pm
goldman is expected to dole out a record 20-plus billion dollars in bonuses this year. of course, critics would argue without the taxpayer bailout that it got at one stage, goldman might not be quite so flush now. do shareholders have a right to be upset. joining us is the author of "it takes a pillage." do you have some sympathy with your former colleagues? >> well, i think, you know, like you said, this is a company that wouldn't be as flush as it is if it didn't have a lot of public support, if it wasn't a public company, and if it hadn't become a bank holding company last year when it was starving for capital. so to kind of flout that at this point is part of the reason everybody is so angry and, of course, the shareholders being angry as well, it's a different side. it's due to the fact that, well, if you're putting this money
2:13 pm
into the bonuses of employees, you're not giving it to us and you're not necessarily setting it aside for the future and what has gone up could go back down and we don't want to be a part of that volatility. >> obviously, if the goldman lot were here they were argue differently, they didn't need the bailout and they gave back the money quickly. the heart of what's happening here appears to be the fact that although they're paying out bonuses the highs for 140 years, the earnings per share will be down 22% on where you were in 2007. specifically because they diluted the shareholders by issuing 100 million more shares to raise capital. is there an argument for giving a one-time jolt on that? >> i think there is. again, all of that capital increase, whether it was public or from issuing shares does dilute what the shareholders are receiving. so they absolutely have a right to ask for that to be somehow more equitable than it's been. i don't know if it's a one-time shot or if it's a shot over the
2:14 pm
next annual period, but it certainly should be in tandem with when the bonuses get paid out so maybe it's a two-quarter shot. >> let me bring in nicole, who is at the manhattan institute and author of the forththcoming book "after the fall." i'm not sure how much of our conversation you heard but you're aware of the goldman discussion. where do you stand? >> this is goldman's money to do what it wants with. the problem is -- can be solve had had in washington. it's making a good deal of this money because of an implicit government guarantee. goldman can't solve this problem, only regulators and policymakers. >> are you asking for the regulate tors get involved in determining where the board puts its money? >> no, they just need to make sure it is flree market capitalism. they're only making these tremendous profits because they have this government guarantee and people perceive this
2:15 pm
unfairness. >> let me ask you specifically on that question of capitalism, capitalism is about rewarding shareholders who offer up capital liquidity and take risk. in an environment where liquidity is given almost for free by the federal reserve and the market is underwritten, you can do -- do you think we should value shareholders less and they should get a smaller piece of the pie? is that what you're saying? >> no, i think that would be a very complex way of fixing the problem. it's much simpler. we have to go back to real free market capitalism which is the lenders to these institutions cannot expect future bailouts. that's the only problem that needs to be solved. the rest of this, it just adds to the distraction and the unfairness that people rightly perceive. >> let me ask you finally about this, how penetratable is this
2:16 pm
argument? do you think your former colleague would say quit if they didn't get the big bonuses this year? >> i think some will inevitably quit anyway and some will be sort of pushed out the door. that is a process that happens at goldman over the years all the time. people always leave for what they perceive as a better deal. nonperforming em plous aployees culled. it will happen anyway, so i don't really think it should be part of the argument. >> naomi, nicole, thank you both for joining us. just ahead on "street signs," a $20 billion budget shortfall every year for the next five years. that's the dire prediction for the state of california. even more scary, they're not alone. we have the list of other states in critical condition. plus, david faber's exclusive interview with liberty media chairman john malone. that's ahead on "street signs" on cnbc. automatic transmission.
2:17 pm
one of 12 world's first innovations. the lexus ls. inspiring an industry. and it means innovation that's helping doctors help patients. its billions of dollars in healthcare advancements in things like early cancer detection and electronic medical records, that will mean better health for more people. healthymagination means never forgetting that health is everything. the american renewal is happening. right now.
2:18 pm
right now 1.2 million people are on sprint mobile broadband. 31 are streaming a sales conference from the road. 154 are tracking shipments on a train. 33 are iming on a ferry. and 1300 are secretly checking email on a vacation. that's happening now. america's most dependable 3g network. bringing you the first and only wireless 4g network. right now get a free 3g/4g device for your laptop. sprint. the now network. deaf, hard-of-hearing and people with speech disabilities access www.sprintrelay.com
2:19 pm
a luxury car that virtually parks itself. one of 12 world's first innovations. the lexus ls. inspiring an industry. unemployment jumped in 29
2:20 pm
states last month, 13 states reporting rates above the national average of 10.2%. it's another troublesome sign for the recovery, but are there pockets of optimism? one perfect example perhaps, utah. scott cohn joins us live from salt lake city. >> reporter: all day long we've been looking at the state of the states as those national state unemployment figures come out. and, yes, there are some glimmers of hope. this is one of them, but as glimmers go it isn't much. the view from here in salt lake city is spectacular. the fog has lifted a little bit this morning. and so has the mood at least according to the state's employment agency, the utah department of workforce development. in a statement with the monthly employment figures, the agency says that the economy remains weak, but the psychological uncertainty seems to be gone. and you can get a little bit of a sense of that. people certainly are working here. there's activity going on you don't, even construction going on, both commercial and
2:21 pm
residential in downtown salt lake city. the health care sector, which is very important to the state economy is one of the few that is adding jobs, but when you look at utah by the numbers, it really is a bit of a mixed picture. the unemployment rate is well below the national average at 6.5% for last month. it ranks as a perennial favorite in cnbc's america's top states for business, number five this year. education and health care adding 4% new jobs this past month. information jobs up almost 2%. government jobs with the help of the stimulus up 1.5%. but that unemployment figure, which is up sharply from a year ago, is the worst here since 1987. in the last year utah has lost 40,000, almost 41,000 jobs. construction jobs down 15.8% despite the construction ro projects we saw downtown here. manufacturing jobs down 9.2%, and foreclosures are up a whopping 32.5%, and that is a problem. people still losing jobs and
2:22 pm
losing their homes. so it makes for a tough go for government officials here, including the mayor, who we spoke to here in salt lake city. he says he is optimistic but cautious. >> my sense is that people feel it's stabilized. i don't get the feeling that in sectors where folks have been hit pretty hard that they see a big upturn at this point. but things aren't getting worse. >> but one of the big problems that they face, budget gaps. in the state of utah where the governor has vowed not to raise taxes, they are looking at an $850 million budget shortfall this year as they head into budget crunch time, and here in salt lake city, the budget shortfall about $4 million. they're asking every department to make cuts. so, simon, this is a bright spot in the u.s. economy, but bright spots these days are relatively dim. >> yeah. what do you think is the takeaway for everybody else then from what you've witnessed down there? >> reporter: well, it is that
2:23 pm
there is a little bit of recovery going on. this state did add jobs in the last month, but it is a tenuous recovery. there are all of these things that they're concerned about. they got a boost from the stimulus that's helped government hiring, helped them accelerate some projects they were working on, about you that stimulus money will run out at some point and at some point the rest of the economy has to pick up the ball and it's not showing any signs yet it's able to do that. >> thank you very much. let's go as far as government finances are concerned to the other extreme. california, poster child arguably for economic crisis but the state is not alone. joining us now to talk about those states at risk and following in california's footsteps is susan, who is managing director for the pew center on the states. what did you come up with in your report is sn. >> we took a look at some of the same factors california is facing. we look at the esize of the
2:24 pm
budget caps, the foreclosure rates, drops in revenues, how well they managed their money and we basically took a look across the country and ranked the states and took a good look at the nine states that were following closest. >> i which would you highlight? >> if you look -- you could take a look at, for example, illinois. illinois is an interesting state. it's been hard hit by housing and unemployment. one thing you could point to in illinois is the fact they've been experiencing -- having a hard time balancing their budget since the last recession. their revenues and expenditures have been consistently out of balance and to balance the budget at the end of the year, which almost every state has to do, they often choose to borrow or to just postpone paying their bills. they were under a fair amount of stress when the recession hit and that's left them with one of the largest budget gaps in the country. a very underfunded pension fund and some pretty serious financial difficulties approximate p. >> give us another one if you would. >> take rhode island.
2:25 pm
it's the smallest state. it's the smallest state but it has some fairly significant fiscal problems. if you -- they have been hard hit on manufacturing. the textile industry has really lost a significant number of jobs. really early in and hard hit by housing in the first half of this decade the median price of a house in rhode island more than doubled and yet last year housing prices dropped more steeply than any other state in the northeast and foreclosures were high. so early in, hard hit, and a big bust. >> of course, the states are in a very different situation because they have to balance their budgets. from these various snapshots that you've taken and looked at in depth, what conclusions do you come to on policy and the best way we can pull ourselves out of this? >> i think the states are kind of in a tough spot here in part because they had a really tough time balancing nearly -- about $180 billion cumulative budget
2:26 pm
cap for fiscal year 2010. they're looking at cumulatively speaking the same size budget gap for fiscal '11 and excess of $100 billion budget gap for '12. the stimulus money runs out during the coming fiscal year and they really given increasing unemployment which is going to be a problem for quite some time, they're going to have a very tough time balancing revenue and expenditures. they don't have a lot of options. they can cut spending, take a look at oregon. they cut $2 billion out of the their last budget. they can raise taxes. more than half the states did. but it's a tough thing to do. >> all right. susan, thank you very much for highlighting that. up next on "street signs," the original "mad money" man jim cramer is around the corner and he's ready to "stop trading." plus, are hedge funds a rip-off? "street signs" will be back in a moment on cnbc. 
2:27 pm
2:28 pm
2:29 pm
all right, everyone.
2:30 pm
it's time to stop -- time to stop trading because "mad money's" john mccain krim crame. >> i'm not good with accents. somebody called on the show sounded like you and i thought he was from alabama. here is the thing that worried me, both dell and intel were very bullish a few months ago going into 2010 and what's known as the refresh cycle, that they felt there's going to be a continuation of good times in 2010. i heard dell in each conference call put it out a little bit. it worries me, but i did preface it by saying i didn't like dell. let's see what hewlett-packard says monday. i think dell is saying the pc business is bad. i don't think hewlett is going to say that. i think there's a trend away from dell toward apple.
2:31 pm
the seam pim who might have bought dell are pieing apples. everybody who is young in this country is making the switch to apple. >> that's a very u.s. centric year. if you're in a cheaper market -- >> that's absolutely true, but i do think the -- there's nothing proprietary about dell. >> dell is attempting to change strategies. >> but do you like that? that perot acquisition? i think hewlett-packard acquisitions have been shrewd and dell's seem desperate to me. all that said, shouldn't nasdaq be down more today? i think the answer is a lot of what happened yesterday may have been related to options expiration and not nearly schts we'd like to say because of actual fundamentals. i think it's always important to point that ought because we're
2:32 pm
bouncing back well today on a not positive backdrop of the individual stocks. >> so are you comfortable with the markets at these levels? >> yes. i have been saying on the show that we're benign until year end because a lot of people -- yesterday there was this -- i was making fun of it on my show, but the long awaited correction. i'm betting we do not get the long awaited correction. >> i watch your show. >> i know. >> what i'm asking is we're going to go for the next leg? >> next week is the season of a strong week. if we're going to have a week that's going to define the rest of the year, it will be next week. i know it's shortened. i don't care. i think the sellers are taking a break. have we seen the highs for the year? i think it's entirely possible. the more important issue is we're in a much higher range. when we go up -- i heard you guys say at the beginning, every time the dollar is up, i look like an idiot when i say that we're -- we can't go down.
2:33 pm
the dollar controls. if you told me the dollar is going to be weak for the rest of the year, i'm telling you we will break out higher. >> okay. >> that's a tough call. you know more about the dollar than i do. >> that's not true. you have some stocks -- >> warner did a secondary last night. when i see secondaries and the stock is up the next day, it says good things. smuckers reported a blowout quarter today. i have to tell people warner brought this pharmaceutical division from proctor. i bet you there will be a half dozen analysts coming out saying you have got to buy warner. i like that story. smucker made a fortune off proctor. i think that warner is going to make a fortune. >> one more. >> william sonoma, the stock is down today. >> what do they do? >> high end kitchen supplies. >> okay. >> this is a quintessential mall stock. they overpay versus what they can buy everywhere else.
2:34 pm
the overpay trade is back. people are overpaying for top quality merchandise. that means ralph lauren should not be down here. i think anything where you overpay, nordstrom's is going higher. >> good to see you. >> really good. >> jim cramer's "mad money," you can catch him tonight. talking to the ceo of sanofi-aventis. the hedge fund industry has had its shares of mishaps since 2008, but will 2010 be a year the industry regains ground? here now is chris condro from lacrosse global fund services which is a unit of cargill. with these markets that are showing such correlation between the dollar and oil, why would i buy in a hedge fund and pay a 20% performance fee? >> well, i think you can argue
2:35 pm
that hedge funds have performed quite well, not only this year but last year as well rel tifer to say the s&p 500. while hedge funds are only up 15% this year, looking at the index, versus 17% for the s&p 500, last year they lost 19% as opposed to 40%. so net net over a two-year period, hedge funds are doing exactly what they should be doing, meaning they lost 4% versus 25% for the s&p. >> so to be clear, they've underperformed this year, hedge funds. >> they have underperformed by 2%, yes. >> right. but i'm still paying a whacking fee to be in them. >> however, if you look at last year, a year where there were certainly significant losses in the market, they lost 19% as opposed to 40%. so while you are paying 2 and 20 on average, you would have lost over a two-year period, 4% versus 25%. >> tell me what proportion do you think of the industry and obviously it's quite a number of
2:36 pm
different ways people are playing the market, but what proportion do you think are involved in the big dollar carry trade and what will happen to them if there's an acceleration upwards in the dollar? >> again, that's just one simple strategy. you really have to look at the hedge funds as an overall diversified list of strategies. there are opportunities that always exist in the market whether they are as basic as long/short equity or as complicated as the stress trades. convertible a.r.m. took a major loss but they're up 42% this year. it's unfair to point to a single strategy and suggest that strategy were to be impacted that hedge funds as a whole wouldn't perform well. >> thank you for joining us. still ahead on the program, david faber's exclusive interview with john malone. his insight on deals. but first we'll trade the
2:37 pm
globe, an american icon in rio.
2:38 pm
2:39 pm
2:40 pm
this is a housing development in suburban america, and this is a housing development in suburban iraq. the builder is sigma construction. its founder came to the united states from iraq and is now investing in his home country again. so what is the name of the village? >> the name of the village is the cold american village. it's something different. it's different than what we are building. it's something amazing. >> this development in iraq's kurdistan region will have 400 villas priced from $250,000 to $650,000. >> tonight a unique look at
2:41 pm
business in a war-torn nation. c cnbc's erin burnett takes viewers "on assignment: iraq." let's have a look at trading the globe. recent tax announcements over in brazil may cause the country to lose some of its luster, so some of the investors fear. here now for more on that is tim seymour, host of "trading the globe" and a fast moneyy tra tr. tell me about brazil. >> this has been a market darling, overweight for a lot of new investors. a couple big deals. the problem here is that the government's actions in putting a tax on nonresidents is the kind of thing that concerns people about emerging markets, political outlash, unpredictability in the markets, and brazil has suffered here, and i think you need to watch out, they're concerned about the appreciation of the real.
2:42 pm
that's a theme we will continue to ride with brazil. it's a great place to invest, but you have to understand the top down to understand the bottom up. >> what is the advice there then? >> i would say be cautious that lou la and the brazilian government are more concerned about domestic issues than they are minority foreign shareholders. so when it comes to some names they may be more interested in the state's assets and the control of these assets than they may be in minorities. look, these are some of the best company hs if the world. brazil is going to have probably 40% earnings per share growth in 2010. it's a market you can invest in. it's big and liquid. a couple names we like are the banks. they probably overprovisioned for bad losses and that will be an upside driver for you as you invest in the banks going forward, and then there's anhueser-busch or inbev bud which would be argue is a
2:43 pm
brazilian companies. we look at companies that we know here that are doing great things abroad. this is really run by the brazilians at this point. they're cutting debt, improving operations. it's a story that's probably got 15 to 15% to 20% upside. it's one of the most important price drivers and price takers in the beer market. >> this pause we've had generally in the appetite for risk, tim, that we've seen over the last couple days in the session, you're still confident after all the runup we've had emerging markets are still worth the upside? >> they are. look, you're getting the earnings per share growth. companies beating on the top line. that's the big debate in the states. companies are improving on the bottom line. emerging you're getting it there. you have an emerging middle class. you have people that are under levered, consumers in brazil that are buying cars that need credit that are getting credit. it's a different story than what we have here. despite some of the top down risks and these are still markets that are more volatile and less mature than ours, these
2:44 pm
are places you're going to see better growth and i think better earnings performance. >> are you trading the globe tonight, tim? >> well, trading the globe, i will probably be looking for my opportunities into the weekend. i do think that the market looks a little tired here, and i think emerging markets have digested some of the strength risks with a strengthening dollar. >> you covered for me very well. it's "fast money." tim seymour at the nasdaq market site. forgive me. up next on "street signs," his clients makes the best plays on the field. but first david faber's exclusive interview with liberty media's john malone. you're watching cnbc, first in business worldwide. because now you can trade u.s. and foreign stocks online, in 12 markets, 24 hours a day,
2:45 pm
all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research and realtime quotes, so you can diversify your portfolio, wherever -- whenever. and we'll be on call around the clock, while you trade around the globe. fidelity investments. turn here. xxxxxxxxxxxxxxxx
2:46 pm
2:47 pm
welcome back to "street signs" with your daily realty
2:48 pm
check i'm diana olick in washington. the number two home builder missed wall street expectations. d.r. horton said its losses narrowed to $239.1 million but it's shares are down almost 16%. the ceo says market conditions in home buildinger still challenging. barclay's acquires crescent real estate. and next week existing home sales, will they or won't they continue their trend upward? forecasts range wildly, but we will see whether or not uncertainly over the future of the tax credit in october kept potential buyers at bay p.m. check ba go to realtycheck. cnbc.com. now that the spinoff for directv has been approved, what does it mean for the future of directv? david faber sat down with liberty media's chairman john malone in an exclusive interview. >> thanks, simon.
2:49 pm
while liberty media no longer controls directv, chairman john malone still has a significant say in what happens to that company. he controls 24% of directv's voting shares. and now that it is no longer controlled by liberty, many investors want to know if it will be sold. >> i can be the first one to say that directv is not for sale. if somebody wants to buy directv, they can call up mike white or me and we'll talk to them, but that's our fiduciary obligation, but, you know, we think directv is in great position. it's gaining market share. it's got the strongest balance sheet really in media. lots of free cash flow generation. it's not very levered. has a rapidly growing latin american business. so, you know, i think they're in great shape. >> reporter: does that ultimately result in will try a
2:50 pm
acquire directv? or verizon may is this. >> that would be speculative for me to respond to. you know, it's obviously been speculated. we know that back quite a few years ago when we were looking to buy directv ourselves, newscorp and at&t were the other bidders. so we know there's an interest there. whether or not a deal makes sense, given the regulatory environment, you know, direct does not need capital. so, you know, it's speculative. but clearly, directv will be very anxious to include a broadband wireless portability, or mobility component to their bundle. >> right. so you get a deepening of the relationship? >> right. >> in that regard, to be able to offer the consumer? >> right. and how deep it goes, you know,
2:51 pm
or how deep it needs to be, or whether it needs to be exclusive or can be non-exclusive, those are all issues that i'm glad we have a ceo now onboard to wrestle with. >> understanding it's clearly speculative in nature, nonetheless, i'm curious as to what your thoughts are about the regulatory possibility of a direct linkup with at&t or verizon? >> i think, in my own mind, it's doable. it would probably require some concessions. but it would take awhile. 57d you wouldn't know the outcome for a while. so you don't go down that road, you know, without really thinking it through. >> of course, a lot of merger partners are going to be thinking things through when it comes to washington, d.c. and its approach to mergers in the media area. certainly we'll have a lot more on that. and more from my interview with dr. malone on monday. >> he doesn't do very many
2:52 pm
interviews. >> not very often. but he speaks his mind. he's not like a lot of ceos that are afraid to say what they're thinking. >> what's the latest on the nbc universal? i know you've been the point person on that and led the field. >> a week ago i was being pointed strongly on all sides to the expecting a deal might be announced by this monday. if not, certainly before thanksgiving. that is s longer the case. as i said at the time when i first reported that, the negotiations between ge and vivendi continue. but are not progressing at a particularly rapid rate. >> do we know what the problem is? >> it's money. it's always money, right? that's all it is. and the deal between ge and comcast is largely -- or almost completely done. comcast, those guys have basically said, see you later. we'll go on vacation and you handle it. they're trying to avoid being brought into it.
2:53 pm
>> yeah. >> we'll see. we're not expecting at this point to hear anything until after thanksgiving. >> david, have a good weekend. thank you very much. football's biggest money man. but first, your trend of the day.
2:54 pm
2:55 pm
2:56 pm
you probably don't need me to tell you that the nfl is flying high in a tough economy. attendance is down only about 2%. television broadcasts of games have been watched by the most virs in 20 years. darren is joined by one of the league's biggest power brokers about the state of the game. >> when you think about nfl superagents tom condon, the co-head of football, which represents the likes of peyton and eli manning. he's here to talk about the future of the game. tom, you know, the nfl is holding up pretty well in this economy as we said. a lot of talk about labor negotiations.
2:57 pm
let's tackle some of the issues. one, the league's -- the rookies' salary cap, or the idea that roger goodel put forward the salary cap. the raiders now being benched, $31 million guaranteed, he's going to point to that. you represented five of the last six number one draft picks. how do you argue against the idea of a rookie cap? >> the rookie cap is only 10% of the overall player pool. and typically, it's the top ten picks or so that are paid at the top of the market. other than that, the other 200 or so players in the draft are really a bargain. so as a for instance, while we have matthew stafford, the first pick in the draft this year, at an average of $12 million a year, in the middle of the draft, a player such as sam baker, the usc first-round draft choice, all-american left tackle, he will start for five years for the atlanta falcons for about $2 million a year. >> it's kind of like the value play. obviously the top couple get all
2:58 pm
the attention. let me ask you about the uncapped year in 2010, because it was thought that this would be an incentive, so there wouldn't be a work stoppage in 2011. now the owners are saying they're willing to have that uncapped year. how big is a negotiating chip of not having a salary cap? >> the salary cap has grown unpress departmented levels. we're at $128 million per team. over the past three years or so, 85% to 90% of the nfl teams have not spent to the salary cap level. so they're not spending there now. if you remove the cap altogether, it really doesn't have any significance. i will tell you what the problem is from the players' standpoint. free agency goes from four years to six years, and so about 50% of the players that were going to be free agents, especially the very attractive players, are now not going to be available. >> that's why i think the owners might be okay with it. let's talk about an 18-game regular season. that would be two games more than now.
2:59 pm
if you're heading up the union, how do you suggest you remedy this so it's not just, okay, we'll just give you your current salary and play two more regular season games? >> well, i mean, the two more regular season games are very significant. significant from the standpoint of, you look at the running back position in a player such as edger and james, he signed a six-year contract as a rookie. they franchised him into year number seven, and then indianapolis let him go at the end of year number seven and he had to go into free agency in the latter stages of his career. so it's a really difficult situation. >> tom, thank you so much for joining us. we hope to have you on again. you're one of the best in the business. and we really appreciate you coming on cnbc. >> thanks very much. >> thank you very much for that. have a great weekend yourself. that's it for "street signs." thank you very much for watching. thank you very much for having me. "closing bell" is next with maria bartiromo in london.
left
right

7 Views

disc Borrow a DVD of this show
info Stream Only

Uploaded by TV Archive on